The Democrat-controlled Alaska State Senate passed House Bill 78 in a 12-8 vote on April 28, in an effort to reinstate the costly defined benefit pensions for state employees – a measure that is anticipated to cost Alaskans billions of dollars.

In a statement following the vote, the Senate Republican Caucus expressed deep concern over House Bill 78, warning that the measure comes with “unknowable future costs, obscure fiscal notes, and a legacy of failure.”

In 2006, the state switched from a defined benefits system to a defined contribution system (similar to a 401K) due to the rapidly increasing pension costs to the state.

“Twenty years later, the prior defined benefits system is still burdening state budgets, with $7.5 billion in unfunded liabilities,” the Republican Minority Caucus warned. “Longer life expectancies, higher medical costs, and other economic factors force Alaskans to pay $200 million a year to offset legacy pension debt.”

GOP lawmakers called the plan a “tried-and-failed public pension system.”

“There is little evidence that public pensions will reduce employee turnover and improve the state workforce,” they added. “There are no reliable numbers detailing how much a new pension-based system would ultimately cost.”

The minority caucus noted that the bill’s fiscal note utilizes numbers from 2025, which were calculated prior to the current global and local economic shifts.

“There is no guarantee the funding threshold will be capable of staying above the 90% floor,” the GOP statement cautioned. “When it falls, Alaskans will constitutionally have no choice but to foot the bill. Employees who opted for pensions will see their contributions rise, and the rest of the populace will contribute through taxes or further reductions to the PFD.”

The bill is now headed to Gov. Mike Dunleavy’s desk, where the GOP lawmakers expressed hope that it will meet the veto pen.

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